The Department of Justice's claim that Apple led a conspiracy to raise e-book prices is on the verge of going to trial. It will be decided by a judge without the help of a jury—and that judge is already leaning toward ruling against Apple.

"I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements [between Apple and publishers], will confirm that," US District Judge Denise Cote said during a pretrial hearing yesterday, according to Reuters.

The US government accuses Apple of being the "ringmaster" in a conspiracy with e-book publishers to fix the standard prices of e-books at $12.99 and $14.99, above Amazon's typical rate of $9.99. Book publishers HarperCollins, Hachette, Simon & Schuster, Macmillan, and Penguin have already settled and promised to repay consumers a total of $164 million.

Apple denies being part of any conspiracy. Cote said her statement about the strength of the government's evidence is her "tentative view." Reuters called the judge's statement "an unusual move before a trial" which "could add to pressure on Apple to settle the lawsuit."

Apple lawyer Orin Snyder said in a statement, "We strongly disagree with the court's preliminary statements about the case today… We look forward to presenting our evidence in open court and proving that Apple did not conspire to fix prices."

The antitrust case, US v. Apple et al., will go to trial starting June 3 in US District Court for the Southern District of New York. It is expected to last three to four weeks and will be tried without a jury. Penguin had objected to the case being tried without a jury, but Cote denied Penguin's motion for a jury trial. Penguin has since agreed to pay $75 million to consumers to settle the antitrust claims in the case.

I agree that Apple is almost certainly guilty, just based on the emails already leaked to the public, but is it really proper for a judge to make comments to that effect before officially hearing the case?

I agree that Apple is almost certainly guilty, just based on the emails already leaked to the public, but is it really proper for a judge to make comments to that effect before officially hearing the case?

This is the judge handing them a free pass. If they pursue a trial, they have to hope they get the most biased jury in the history of biased juries and then hope that the bias is in their favor.

There is no jury. The judge alone will decide the outcome of the case.

What I don’t understand is why Apple would care at all about what ebook prices are. Apple sells every other kind of digital media for about a buck a title; it profits off the hardware. Amazon sells its hardware cheap; it profits off the software aka ebooks. What drew Apple into this fight in the first place; Apple could hurt Amazon a lot more by giving ebooks away.

I agree that Apple is almost certainly guilty, just based on the emails already leaked to the public, but is it really proper for a judge to make comments to that effect before officially hearing the case?

Who might he unfairly prejudice? There is no jury.

It's also unlikely that Apple is going to present new evidence that hasn't already been submitted. They haven't argued over the interpretation of the evidence yet, but a Judge used to handling antitrust cases likely has a lot better idea of if the evidence he's seen is credible and convincing.

What I don’t understand is why Apple would care at all about what ebook prices are. Apple sells every other kind of digital media for about a buck a title; it profits off the hardware. Amazon sells its hardware cheap; it profits off the software aka ebooks. What drew Apple into this fight in the first place; Apple could hurt Amazon a lot more by giving ebooks away.

What Apple cared about was 1: giving publishers a reason to use Apple's bookstore, and 2: not being undercut by Amazon. So they talked the big publishers into using a commission system with standardized prices. Ars has a bunch of previous articles detailing how it all worked.

I agree that Apple is almost certainly guilty, just based on the emails already leaked to the public, but is it really proper for a judge to make comments to that effect before officially hearing the case?

This is the judge handing them a free pass. If they pursue a trial, they have to hope they get the most biased jury in the history of biased juries and then hope that the bias is in their favor.

If they choose to go to trial, all the judge can do is hope the prosecution team can keep the whole thing on the rails and get the jury aboard and then mitigate or enhance damages.

Also, it should be noted that this was a statement issued during the pretrial hearing, not an offhand remark to Joe Public. It should be further noted that the statement was made at the prompting of a Justice Department lawyer asking the judge to share her thoughts on the matter.

They know what they're doing. They're saying everyone knows this is going to go poorly for Apple, and by doing so maybe save a lot of time, effort, and taxpayer money by signaling that.

What I don’t understand is why Apple would care at all about what ebook prices are. Apple sells every other kind of digital media for about a buck a title; it profits off the hardware. Amazon sells its hardware cheap; it profits off the software aka ebooks. What drew Apple into this fight in the first place; Apple could hurt Amazon a lot more by giving ebooks away.

It's all about Lock in.

Digital books are a huge selling point for tablets. If your target market buys their books from other sources such as Amazon, then there is nothing tying them to the Apple platform. Kindle books can be read on Windows, Google, Amazon, and Apple devices. That means a person who is primarily concerned with buying books can leave the Apple platform easily. This is already the case for music.

So Apple wants to promote use of it's ebook store and drive consumers to purchase their books from Apple, which can then only be read on Apple devices, locking you in. Consumers won't do that if your e-book prices are 30% higher than the competition.

Sure they could give the books away, but that's a tough thing to do when you want to get 30% of the sale at the same time and they have to pay the publishers. This was the easier and more profitable route. Force price parity to eliminate one barrier to adoption of your book platform.

I don't quite understand where the conspiracy is. If Apple was selling ebooks at a higher price, and they had willing customers ready to shell out the extra bucks for the convenience of not having to switch their favorite platform - I see no harm done. Its nothing like raising the prices of essential supplies like food and water during natural disasters.

If we are gonna hold Apple and other publishers guilty of jacking up prices on ebooks, how about doing the same to publishers of scientific journals. They make the researchers pay through their nose for each page and each additional figure (and FSM forbid its a color figure), and then on top of it charge $$ for access to each individual article. When is that gonna get addressed by the government because after all it is a lot of government money that is used in conducting the research that is being published.

The conspiracy is that they were using strongarm business tactics to force other companies like Amazon to raise their prices to match or be unable to sell the books. The core of the plan was that Apple and the publishers set a minimum price that everyone had to sell at, or else they wouldn't be allowed to sell the product. So Amazon would be forced to raise it's prices or stop selling all books from those publishers. Which is illegal on the scale Apple constructed. The ultimate goal was to gouge customers and line Apple's pockets with ridiculous profit margins.

The best part of the whole horrible process, is when in the desire to turn the screw a little further in, Apple requested that the DoJ look at Amazon for supposed illegal behavior. Amazon complied with the DoJ, showed them the records, and the DoJ came back at Apple saying "Well Amazon checks out, but we've found you're looking pretty suspicious." In an attempt to screw Amazon just a little bit more for their own gain, Apple wound up being hoist by their own petard.

I don't quite understand where the conspiracy is. If Apple was selling ebooks at a higher price, and they had willing customers ready to shell out the extra bucks for the convenience of not having to switch their favorite platform - I see no harm done. Its nothing like raising the prices of essential supplies like food and water during natural disasters.

If we are gonna hold Apple and other publishers guilty of jacking up prices on ebooks, how about doing the same to publishers of scientific journals. They make the researchers pay through their nose for each page and each additional figure (and FSM forbid its a color figure), and then on top of it charge $$ for access to each individual article. When is that gonna get addressed by the government because after all it is a lot of government money that is used in conducting the research that is being published.

Amazon was selling book A for $10. Publishers wanted higher ebook prices but couldn't force Amazon to sell it at their suggested price based upon how books were sold.

Apple convinced the publishers to take on the Agency model which allows them to fix the price at a certain dollar amount. Now book A cost $15 and every retailer, Amazon included, has to sell that digital book for $15. Now consumers who were happy with Amazon have to pay more for the same book.

Publishers are happy since they set the price and hence the value of the book to what they think it is. Apple is happy because, while the books are more expensive, Amazon can't undercut them anymore.

I don't quite understand where the conspiracy is. If Apple was selling ebooks at a higher price, and they had willing customers ready to shell out the extra bucks for the convenience of not having to switch their favorite platform - I see no harm done. Its nothing like raising the prices of essential supplies like food and water during natural disasters.

Because when you actively pursue getting the publishing industry to collude together with your platform (Apple) to distribute their books via electronic means, in order to manipulate the price they are selling at otherwise, it is not legal. They (Apple) weren't doing this because they felt compelled to 'save' the book industry. They saw their competition (Amazon) raking in all of the profits and they wanted a piece of the pie. Now I am not suggesting Amazon was/is innocent either. Amazon has covered some predatory practices themselves by cornering the market (we're talking 90%) of e-book distribution and then turning to the publishers and demanding that they sell their books to them for cheaper than the price Amazon was selling them for ($9.99). The cost of production associated with those e-books is such that it is not feasible to sell them for such a low price without undermining the publisher's own investment and costs. A lot of people seem misguided when they think about e-books - a lot of them seem to think it is as simple as moving some magical electronic file onto a server, when there is still a significant amount of formatting, editing, markup, and of course marketing/advertising that goes into it.

I agree that Apple is almost certainly guilty, just based on the emails already leaked to the public, but is it really proper for a judge to make comments to that effect before officially hearing the case?

This is the judge handing them a free pass. If they pursue a trial, they have to hope they get the most biased jury in the history of biased juries and then hope that the bias is in their favor.

There is no jury. The judge alone will decide the outcome of the case.

Corporations are people and people have the right to a trial by a jury of their peers.

Which raises some confusing questions, but the point is that Apple would have to be batshit to walk into an arbitration with the judge who basically said "what you did was illegal" during pre-trial hearings.

That's about all that needs to be said here. I'm on the record as thinking Apple is damned if they do and damned if they don't, so it probably doesn't matter what they do.

I'm sure they could request a jury and get one ... if they actually thought they could win. But at this point unless they managed to gather a jury of direct zealots or could pay each of the members off, I doubt a jury would do much more than turn the case into a media circus. At least one-on-one with a judge, they have a much higher chance of keeping the case out of the general public's eye.

Nonsense. The trial hasn't begun, but the judge has reviewed the preliminary evidence. Asking a judge to pretend that they make up their mind at the very last instance is dumb. Like any person they continually consider things as they are presented.

There is no jury. The judge alone will decide the outcome of the case.

Corporations are people and people have the right to a trial by a jury of their peers.

Which raises some confusing questions, but the point is that Apple would have to be batshit to walk into an arbitration with the judge who basically said "what you did was illegal" during pre-trial hearings.

The judge has seen the evidence that will be presented by both sides. The only thing she hasn't gotten yet is the lawyers' arguments about how to interpret the evidence. After she hears that, then she will make a legally binding ruling.

This "tentative view," as she calls it, appears to encourage Apple to settle.

There is no jury. The judge alone will decide the outcome of the case.

Corporations are people and people have the right to a trial by a jury of their peers.

Which raises some confusing questions, but the point is that Apple would have to be batshit to walk into an arbitration with the judge who basically said "what you did was illegal" during pre-trial hearings.

All parties to the suit agreed to a bench trial (and therefore waived their right to a jury trial) in October.

I agree with you, as well; Apple would be crazy not to come to a settlement if the evidence is that damning.

There is no jury. The judge alone will decide the outcome of the case.

Corporations are people and people have the right to a trial by a jury of their peers.

Which raises some confusing questions, but the point is that Apple would have to be batshit to walk into an arbitration with the judge who basically said "what you did was illegal" during pre-trial hearings.

Nonsense. The trial hasn't begun, but the judge has reviewed the preliminary evidence. Asking a judge to pretend that they make up their mind at the very last instance is dumb. Like any person they continually consider things as they are presented.

There is no jury. The judge alone will decide the outcome of the case.

Corporations are people and people have the right to a trial by a jury of their peers.

Which raises some confusing questions, but the point is that Apple would have to be batshit to walk into an arbitration with the judge who basically said "what you did was illegal" during pre-trial hearings.

This. Also, judges like to try as much as they can to keep the system running smoothly. If he thinks based on all the pretrial material, especially if there is smoking gun quality evidence, that one side is almost certainly going to lose, then he/she will urge the parties to settle and not waste 4 days of his time and judicial resources on a trial that he knows one side already has a slam dunk on. Those are days he could be using to devote his time to other cases that don't have such a clear outcome.

I've seen judges get really, really agitated when a party refuses to settle or mediate out a case where everyone (including them, but are hoping for some kind of legal hail Mary) knows that they are going to lose. In some instances your damages will be inflated to include a "You Wasted My, and Everyone Else's Time" bonus.

What I don’t understand is why Apple would care at all about what ebook prices are. Apple sells every other kind of digital media for about a buck a title; it profits off the hardware. Amazon sells its hardware cheap; it profits off the software aka ebooks. What drew Apple into this fight in the first place; Apple could hurt Amazon a lot more by giving ebooks away.

As far as I understand it (which may be not at all), they wanted their traditional 30% software cut (which they also take on apps and music - also why amazonmp3 can offer .69 cent songs occasionally, which is probably at cost to entice people to try them out), which would have put their books above the cost of Amazon (who was taking closer to a 10% margin).. This would have given people zero incentive to buy from them (as they would be a couple dollars more expensive). So instead, they reached an agreement that everyone who sold ebooks would have to sell at "apples price" so they wouldn't have to compromise their margins..

Apple argues that the Department of Justice is wrong to portray Amazon as a victim, along with consumers, of a conspiracy to raise prices. Instead, the company claims that Amazon was contemplating agency pricing too and was pleasantly surprised when the publishers took it up on their own. Apple is also using colorful emails obtained from Amazon executives to make its point:

Quote:

”I guess what we never figured in was the idea that five publishers would band together and insist on receiving worse terms,” the email said. “And then Amzn would be ‘cornered’ into accepting them.”

Apple contends that Amazon was actually in discussions with publishers about a switch to agency pricing at exactly the same time as Apple in January 2010, so there was no ultimatum from publishers, no victimized acquiescence from Amazon and no restriction on competition from Apple's agreements. In Apple's portrayal, it was not a conspirator but an entrant into a hotly contested new market. (Amazon counsel Michael Kipling of The Kipling Law Group referred my call to an Amazon representative, who declined comment.)

But regardless of what Amazon was doing, I still want to see the evidence of actual collusion. Something to show that Apple basically said: "hey guys, lets all get together and set some prices".

But it may be moot. The judge seems to have already made up her mind:

Quote:

Cote stressed that the case represented an enormous amount or work, and told the parties to call her “day or night” if they decided to settle.

If the pubishers all made a deal, it was for a reason, the last publisher was trying to hold out so they could sway the uninformed and uneducated ( on the ebook industry ) jurty pool to their favor.

One problem with this...

From the article-- The Department of Justice's claim that Apple led a conspiracy to raise e-book prices is on the-- verge of going to trial. It will be decided by a judge without the help of a jury—and that judge-- is already leaning toward ruling against Apple.

From the article-- The Department of Justice's claim that Apple led a conspiracy to raise e-book prices is on the-- verge of going to trial. It will be decided by a judge without the help of a jury—and that judge-- is already leaning toward ruling against Apple.

Penguin didn't settle with the State case as there are actual damages associated with that. They were hoping to weasel into a jury trial on procedural grounds that they had waived their right before the state cases were consolidated (it didn't work). Apple is the only defendant left against the DoJ but Penguin and Apple both get a bench trial versus the states attorneys general.

Now I am not suggesting Amazon was/is innocent either. Amazon has covered some predatory practices themselves by cornering the market (we're talking 90%) of e-book distribution and then turning to the publishers and demanding that they sell their books to them for cheaper than the price Amazon was selling them for ($9.99). The cost of production associated with those e-books is such that it is not feasible to sell them for such a low price without undermining the publisher's own investment and costs.

I'm not defending Amazon (although I do occasionally buy from them) but I have trouble with this cost issue. There are no printing costs associated with e-books, no shipping costs, no storage costs, no returns, none of the costs associated with physical books apply. As for the cost of producing the book, that was paid to produce the hard copy, there is no (or a little) additional costs for the e-book.

From many previous threads I'm not the only one who has issues with these purported costs.

Quote:

A lot of people seem misguided when they think about e-books - a lot of them seem to think it is as simple as moving some magical electronic file onto a server, when there is still a significant amount of formatting, editing, markup, and of course marketing/advertising that goes into it.

Hey, a long time ago books were actually typed out by the authors on a typewriter. Typesetting these books took some work. But today authors write their books on word processors and while there may be some additional work involved, it's trivial as compared to the typewriter days, and that work done to produce the hardcopy anyway. Selling an e-book is little more than a file download.

If you claim additional costs above and beyond what was already spent to produce the hardcopy, please explain.